(Image: ThinkStock)

Before you say “yes!,” take note. If you receive a pre-recorded message promising a lower interest rate on your credit card, be on high alert. The companies calling claim to be able to negotiate a significantly lower rate on your behalf, for a fee. According to the Federal Trade Commission, you should delete these messages because they’re scams.

These companies attempt to hook you by claiming to have special relationships with the major credit card companies, guaranteeing a very low rate. Consequently, according to them, you’ll be able to pay your debt three to five times faster than average. Some also offer money-back guarantees. In addition, they often create a sense of urgency, claiming you need to act now so you won’t miss out on this limited-time offer.

However, you can negotiate your interest rate on your own, for free. There’s no need to pay someone else to do it for you. The FTC offers these tips for protecting yourself from these types of scams:

• Don’t provide your credit card information. Your card could be charged or the number could be sold to other scammers.
• Never give out your bank account or Social Security Number. A scammer will often ask for this information during an unsolicited sales pitch and then use it to commit other frauds against you.
• Be wary of any unsolicited sales calls that are pre-recorded, especially if your phone number is on the National Do Not Call Registry. You shouldn’t get recorded sales pitches unless you’ve agreed to accept these calls, with a few exceptions.
• If your number is on the National Do Not Call Registry, a telemarketer may call you only if you have agreed to accept calls from the company the salesperson works for, if you bought something from the company within the last 18 months, or if you have asked the company for information within the last three months.
• To report violations of the National Do Not Call Registry or to register your phone number, visit DoNotCall.gov or call 1-888-382-1222.

What are your thoughts on this new debt collection technique? Take our poll.

Should debt collectors be allowed to contact debtors on Facebook?online survey

Myth: You can pay someone to make bad things on your report “go away.”
Reality: Services like this are more than likely a scam. According to the Federal Trade Commission, their attorneys say that they have never seen a legitimate credit repair company making claims to remove bankruptcies, erase bad debt, or create a new credit identity. Any company that claims they can do this is lying to you. The FTC says you can spot one of these scams by looking out for some of these red flags:

• The company wants you to pay for credit repair services before they provide any services. Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the services they promised.
• The company doesn’t tell you your rights and what you can do yourself for free.
• The company suggests that you try to invent a “new” credit identity—and then a new credit report—by applying for an Employer Identification Number to use instead of your Social Security number.

Myth: Employers can see your credit score.
Reality: Employers don’t have access to your credit score, only your report. If you’ve given written permission for an employer to do a background check, the package they receive will include information about your financial history. Employers receive a modified version of your credit report (known as an employment report) from the three major credit reporting agencies, which doesn’t include your score. If you find out that you didn’t get a job because of information in your credit report, the employer is obligated to show you the report and tell you how to get your own copy. Your report is free of charge if you make a request within 60 days of getting a rejection notice from an employer.

Myth: credit counseling will lower your credit score.
Reality: Participating in a debt management program through a credit counseling service is not considered a negative mark on your credit report. Before you agree to work with a credit counseling service, make sure that the agency is affiliated with a national body (such as the National Foundation for Credit Counseling) and is accredited by a reputable third-party accrediting body (such as the Council on Accreditation).

Related link: 4 Credit Reporting Myths and Realities

Sheiresa Ngo is the consumer affairs editor at Black Enterprise.

For more on credit report myths, pick up the December 2010 issue of Black Enterprise magazine, on stands now.

Freeman

“I felt violated and victimized,” Harrine Freeman says of the day her purse was stolen from the passenger seat of her locked car at a Hyattsville, Maryland gas station in late July. No one at the busy corner station offered much information after the thief smashed a window and sped off with her house keys, checkbook, driver’s license, car insurance, vehicle registration, nearly $100 in cash, as well as her credit, ATM, and health insurance cards. “People were just looking at my car, but no one was saying anything,” Freeman says. “Later, the gas station clerk told me that the same thing happened to another woman the week before.”

The car break-in led to a long battle against ID theft for Freeman. The Identity Theft Resource Center reports that nearly 10 million Americans were victims of identity theft in 2008, a number expected to grow due to the shrinking economy. On average, victims lose between $851 and $1,378 out of pocket due to expenses related to identity theft and spend an average of 116 hours repairing the damage. In total, Freeman estimates she spent $2,000 and 100 hours on damage control so far. Here, Freeman, author of How to Get Out of Debt (Adept Publishing; $19.95) and CEO and owner of H.E. Freeman Enterprises, a personal finance service, shares the frustrations and lessons learned during her still unsolved case of identity theft and offers tips to use should you find yourself a victim of identity fraud.

“Luckily I still had my cell phone and was able to call the police and cancel everything but my checking account, which I had to close in-person the next day though I was able to flag the account for suspicious activity,” Freeman says. She filed an identity theft complaint with the Federal Trade Commission and placed fraud alerts with the credit reporting agencies, along with TeleCheck.

“I later filed complaints against my bank with the Better Business Bureau, the North Carolina Department of Justice Consumer Protection Agency as well as State of North Carolina Office of Commissioner of Banks where the bank is headquartered after I found out the thief was able to withdraw $3,000 from my new account even though you had to swipe a debit card and enter a secret code for every transaction,” she adds.  “I’d already reported the potential for identity theft to the bank and found out a transaction for $1,200 was under investigation, but even knowing my situation, the bank still charged me $207 in insufficient funds fees.”

And on top of that, Freeman had just paid my mortgage and all my bills, so she had checks bouncing and couldn’t access her money because the bank froze her account.

“I called the bank and the investigator for weeks trying to figure out how this could’ve happened, who was going to reimburse me and when. Out of frustration, I left a message for the president of the bank and someone called me back saying they’d take care of everything,” she says. “Ultimately, I got my $3,000 and the fees were reimbursed, but it shouldn’t have taken so long and I shouldn’t have been charged any fees since the bank knew my situation. The only reason I got as far as I did was because I started getting upset, something I wish I’d done sooner.”

Despite the experience, Freeman learned a valuable lesson about safeguarding her belongings.

“I’ve helped other people through identity theft before, so I wasn’t impacted as much as the average person. I still feel like I could never go back to feeling as secure about my personal information as I did before this happened, but I know for sure that I won’t be leaving my purse on the passenger seat of my car anymore.”

Stop Thief!—Strategies for thwarting potential damage from identity theft

React quickly. Freeman believes that reporting your identity theft and canceling your accounts right away can help prevent thieves from draining your accounts and damaging your credit score.

File the right reports. Start with an in-person police report, followed by an online Federal Trade Commission Identity Theft Complaint Form (www.ftc.gov), which the FTC shares with other law enforcement agencies. If local law enforcement refuses to take a report of your I.D. theft, ask for a miscellaneous incident report instead.

Take preventative measures. Place a free 90-day fraud alert on credit reports with the three major credit-reporting agencies. Once expired, use your police report to request seven-year extended fraud alert, and check your credit reports often for unauthorized activity.

Resources

Identity Theft Resource Center
Federal Trade Commission

Credit Reporting Agencies
TransUnion: 1-800-680-7289; Fraud Victim Assistance Division, P.O. Box 6790, Fullerton, CA 92834-6790
Equifax: 1-800-525-6285; P.O. Box 740241, Atlanta, GA 30374-0241
Experian: 1-888-EXPERIAN (397-3742); P.O. Box 9532, Allen, TX 75013
Innovis: 1-800-540-2505; Consumer Assistance, P.O. Box 1358, Columbus, OH 43216
Chex Systems: 1-800-428-9623; Consumer Relations, 7805 Hudson Road, Suite 100, Woodbury, MN 55125

Check Processing Systems
Telecheck: 1-800-710-9898; Fraud, Identity Theft and Forgery Division, 5251 Westheimer Road, Houston, Texas 77056

BlackEnterprise.com’s Credit Card Predatory Practice Prevention Checklist

“Jessica’s Money Blog” is one example of a Website that touts fraudulent claims about receiving stimulus funds. (Source: Officialstimuluspayments.com)

Waiting for your cut from President Barack Obama’s $787 billion stimulus package?

Well, don’t hold your breath.

Since Obama signed the bill into law, sites such as OfficialStimulusPayments.com have been cropping up across the Web promising to expedite your stimulus check from the government.

But, there is no money being given out to individual taxpayers as part of Obama’s package. Instead, these companies are preying on unknowing and desperate individuals bilking them out of as little as $2 and as much as $1,000.

The Federal Trade Commission warned consumers last week that the promise of stimulus money in return for a fee or financial information is always a scam.

Shorty after Obama signed the plan last month, a crop of sites claiming to help consumer access their slice of the pie, sprouted up.

Unlike Bush’s economic stimulus which distributed $300 to $1,200 rebate checks to individuals and families in 2008, the American Recovery and Reinvestment Act will only funnel funds to state governments. Each state can apply for grant money to rebuild or strengthen its infrastructure. There are also a series of tax cuts for 95% of Americans. But for anyone not closely following Obama’s plan, it’s easy to assume the government will be cutting more checks for Americans.

Here’s how it works: An e-mail, online ad, or Website says you’re eligible to get an economic stimulus payment. You’ll either have to mail back a form or submit one online with your address, phone number, and sometimes credit card information. The message might appear to come from a rebate company or look like it’s straight from the Internal Revenue Service (IRS), the FTC says.

Other scams tell consumers that “their grant” is available for a small payment by credit card. But here’s the real gotcha! Hidden way down in the fine print of the agreement is your enrollment in a paid program. Consumers can expect to see several hundred or even $1,000 worth of charges on their credit cards. Yikes, talk about a de-stimulus plan.

In an investigation done by PC World, Financial Crisis Grant, one of the suspect companies, billed customers a monthly membership fee of $79.95, indefinitely. Here’s what the Better Business Bureau had to say about companies like Financial Crisis Grant: “In our experience, companies placing government grant ads have no affiliation with the government, but rather, are third parties offering information that can often be obtained for free from government agencies.”

One of the sites I came across, OfficialsStimulusPayments.com, directs users to “Jessica’s Money Blog,” and the first post reads, “How I got a $12,000 Check from the Government to Start My $5,000 a Month Business on Google.”  To receive the money, users must send in $1.99 for a “Free Grant Kit” and $3 to cover shipping of a Google Home Business Kit. Interestingly enough, after the FTC news conference last week, Jessica’s Money Blog was no longer accessible by its Web address Jessicasmoneyblog.com, according to the Los Angeles Times. Now, the site operates under a different Web address, with the same false information.

Another site, JasonGetsGrants.com, also promises to help you access $12,000 in government grants within 30 days. The friendly, conversational tone is quite convincing. The blog says, “Note: I hate all those ‘get rich quick’ schemes you see on TV where they tell you that you’re going to make thousands on real estate investing or some other crap…”

This is the same phrasing used on Jessica’s Money Blog. What’s more startling about the site is the missing time stamp on the user comments. This is at least a minor indication that the site may not be legit.

Some of the scams encourage you to click on links or open attached forms, which may be even worse than sending in money. Simply clicking the link or opening the document can install harmful software, like spyware, on your computer, leaving your personal information in the hands of an identity their, warns the FTC.

E-con artists are also guising themselves as the Internal Revenue Service, so watch out. If you get an unexpected email from someone claiming to be from the IRS and asking you to call a number or email back personal information, forward it to phishing@irs.gov, then delete it without clicking on any links or opening any attachments. If you think you are the target of a scam, you also can file a complaint with the FTC.

If you think you’re eligible for a government grant, check out Grants.gov, an official government site with free information. And for more information about the economic stimulus package, visit Recovery.gov.

Remember, only sites ending in “.gov” are official government sites, so steer clear of someone offering any type of government money from a “.net,” “.info,” or “.com.”

Buy at the end of the month. Apparently salespeople in this industry have quotas too. So, if you’re looking to buy a cell phone or plan, sales representatives maybe a bit more flexible towards then end of the month when they’re grinding to meet that quota. Sweeten the deal by offering to opt for a family plan. Also, be sure to do your research before hand. Know what other providers are charging for the same or similar services. Companies may be even more inclined to add more to your package or offer a greater discount.

No service, no fee. If you’re moving overseas, even to an area of the country your provider does not service, you do not have to pay a cancellation fee. Be sure to check your contract to verify. There’s no reason you should be charged roaming fees or international fees, since it’s not initially what you signed up for. You may even want to talk to a supervisor to get out of your contract.

You can call 411 for free! This is probably the best piece of information I found since my family dials 411 more than we dial each other. Dial 1-800-FREE-411 or 1-800-GOOG-411, which will connect you to Google’s directory service. This can save on those exorbitant surcharges just for calling information.

Above all, understand your bill. This is crucial, as it can prevent wasteful spending on features you don’t need or never knew you had. Set aside a few minutes one day to call your provider and have every charge on your bill explained. Tedious? Maybe. Helpful? Without a doubt. I took the time to do this over the summer and found that my mother’s line on our shared plan was being charged megabytes usage. Nevermind the fact that she just learned how to open her e-mail a month ago. The Federal Trade Commission offers a breakdown of every charge on a sample bill.

Cell phones are convenient and a great way to keep in touch with family. They can even occupy your time when you’re simply bored. But there’s no need to break the bank paying the bills.

“In tough times people are likely to be looking for attractive solutions to their problems, whether it is money-making schemes or bogus claims to save them from foreclosure,” says Frank Dorman, a spokesman for the Federal Trade Commission (FTC). Here are some scams that experts have seen become more prevalent during the credit crisis:

Promise of debt relief: Consumers hampered by consumer debt may be particularly vulnerable to claims that a company can remove a bankruptcy, cut debt in half or erase negative information from a credit report. The only way you can improve your credit score is by exhibiting sound financial habits over time, such as eliminating debt and paying bills on time. If a company asks for money to improve your financial picture or tells you to stop paying your bills, walk away, the FTC warns. If you need professional help with your debt, contact a company approved by either the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies.

Employment: With the unemployment rate at 6.7% and expected to grow, scam artists are targeting those who are unemployed with promises of work-at-home schemes and various business opportunities. However, with most of these fraudulent opportunities, you’ll be asked to cough up some money to get started. They also may make ridiculous claims, such as offering you the opportunity to make hundreds of thousands of dollars working only 15 hours per week. Some of these offers may come over the Internet, but some may crop up as you’re going about a legitimate job search.

“You can find ads for scams at places like Monster.com where scam artists offer someone a job and rope them in,” says Paul Bresson, a spokesman for the Federal Bureau of Investigation.

Before agreeing to a business opportunity, check with the Better Business Bureau, your state attorney general, or a local consumer protection agency to see if there have been any complaints against the company, the FTC advises.  Also, ask for references from others who have benefited from the opportunity.

Foreclosure rescue and loan modification: The mortgage crisis has many Americans struggling to save their homes from foreclosure, giving scam artists plenty of potential victims to target. Some scam artists promise to save a home from foreclosure if the owner signs over his title to the con artist. Others contact homeowners with offers to refinance or modify their loans, only to trick the homeowner into signing paperwork that transfers ownership to the scam artist.

Yet another scam involves contacting a homeowner and offering to negotiate with the homeowner’s lender for a fee. While there are legitimate loan modification companies that can help you negotiate with your lender, be sure to utilize the services of counseling agencies approved by the U.S. Department of Housing and Urban Development (HUD). These agencies, a list of which can be found on HUD’s Website, will often help you negotiate for free. To lessen your chances of being scammed, don’t accept offers to help you save your home from financial experts who contact you out of the blue. Contact your lender or a housing counseling agency to discuss your options.

Phishing: Scams in which e-mails are purportedly sent from a bank asking you to click on a link and provide personal information such as a Social Security number are nothing new. But in today’s worrisome economic climate, with bank failures and mergers in the news, an e-mail that claims your bank has been taken over could sound more believable to some.

Phishing scams can also take place via phone. Some scam artists have even managed to spoof phone numbers, meaning a company’s legitimate phone number could appear on your caller ID system when it’s really a scam artist on the line, Bresson says. If a company contacts you for personal information, don’t provide it. Instead, delete the e-mail, look up the phone number in the phone book, and call the company yourself. Explain that you were contacted about providing information and ask if the solicitation was legitimate.

Promise of financial rewards: Even the most skeptical person may be vulnerable to an e-mail message promising easy money or a financial prize if he or she is in financial distress. For that reason, scams in which victims are asked to wire money for a fee or send a bank account number in order to claim a lottery prize may be particularly harmful today. The bottom line: Be wary of any quick fix solution or promise of easy monetary rewards. “If it looks too good to be true it probably is,” says Bresson.

More Web Resources:

If you think you’ve been scammed, you can contact the following organizations:

Fraud.org

Internet Crime Complaint Center

Consumer Fraud Reporting

Federal Trade Commission